After considering the benefits of specializing last week, let us consider an alternative strategy.
There are valid reasons and benefits to diversify your micro business:
1. For survival.
When just starting out you may not have enough demand for your specialty offerings yet. It can cost a lot of resources and energy to create that demand. Offering more services takes the pressure off and allows you to find your legs. It might allow your business to grow quicker because you are saying 'YES', rather than no. An example of this would be taking on cleaning contracts during the evening and weekends in order to keep your days free to promote your core services.
Having a variety of income streams also provides a little insurance for seasonal fluctuations in business or changes in the economy. You are able to switch gears quickly. An example of this would be offering a snow removal service in the winter when painting traditionally slows down. In a booming economy new construction painting is in high demand, but in a down economy there may be more opportunity in custom homes, residential re-paints, renovation painting, commercial painting, or insurance work. Developing a full quiver of painting skills allows you to adapt to market opportunities.
2. To learn new skills...
As an entrepreneur, doing the same thing day in day out may not challenge and stimulate you enough. Applying your work ethic, creativity and skills to new projects can keep you fresh and interested in your work. Many skills are transferrable to new applications so you often have a head start on learning and becoming proficient in other trades. Knowing more of the peripheral skills and steps involved in your trade helps to keep a good perspective on the whole project.
3. To develop more streams of income.
Having more streams of income can make for a more stable business. You don't require as many customers because you can sell multiple services to the same client. An example of this I've noticed is window cleaning in Victoria, BC. Being a very damp environment with lots of trees, most window cleaners I've talked to offer window cleaning, power washing, roof de-mossing, and gutter cleaning. That's 4 services for each customer. Meaning that they need approximately 4 times less customers.
One market that will appreciate a multi-solution provider is property management companies. The more problems you can solve for them, the more work they will be happy to send you. If you can offer junk runs, painting, cleaning, carpet cleaning and repairs, they will appreciate the efficiency. Once you establish yourself as a 'one-call' solution it will be very painful for them to try other options. The danger here is that one or two clients provide all your projects and if a manager moves along, you could lose a big chunk of work.
Another market that will expect you to provide a variety of skills is insurance and restoration painting. These clients are usually under strict budgets and timelines. If you can make their life simple and make them money, they will keep you busy. At a minimum you will need insulate, drywall, seal, paint and replace trim.
Some big box hardware retailers offer installs services. This too presents an opportunity to offer a variety of services for one single client. The more problems you can solve, the more value you offer, the more work you'll get.
What you are selling to these types of clients is not so much a particular trade or service. You're main value proposition are things like time savings, consistent quality, lower overall cost and ease of coordination.
The conclusion I've reached is that there are a few critical decisions to be made on your part in order to thrive either way.
The main keys to deciding between specializing or diversifying are...
1. Make a decision. Intentionally decide what type of business you prefer to operate. What suits your personality, your skills, and your market? What will provide your business the best competitive advantage?
2. Make sure you market your business to the right market.
If you specialize in a unique type of artistic faux-finish painting, marketing yourself to restoration companies is not productive. Conversely, if you are a jack of all trades, marketing yourself to custom home builders is probably not an ideal strategy. Pick the right message for the right market. As a seasoned fly fisherman can tell you, the exact right bait at exactly the right time at exactly the right spot is what is required if you are trying to catch a specific type of fish.
3. Develop a core competency - become highly skilled in at least one thing, even if you diversify.
4. If you choose to diversify, try to make that your specialty. Diversifying is itself, ironically, a specialty because few can do it well. Build your business on HOW you do business (honestly, dependably, affordably, consistently, etc), rather than WHAT you do for business.
What have you found effective in your business when it comes to either specializing or diversifying?
Please check back next week for a short and interesting look at the idea of risk, along with a link to one of the most beautiful and incredible videos i've ever seen!
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